Market volatility seen ahead of BSP policy meet
By Arra B. Francia
Senior Reporter
VOLATILITY may prevail in the week ahead for local shares amid fresh trade tensions between the US and China, while investors may also look at the results of the Bangko Sentral ng Pilipinas’ (BSP) upcoming policy meeting.
The 30-member Philippine Stock Exchange index (PSEi) climbed 0.39% or 31.77 points to close at 8,129.93 last Friday. It was down by 0.66% or 54 points on a weekly basis, weighed down by the 1.2% decline in holding firms despite a 2.9% surge at the mining and oil counter.
Turnover averaged at P6.2 billion, amid average daily net foreign buying of P59 million.
“With all this negative pressure from external concerns like the trade war, the general sentiment remains very cautious. The continued decrease in inflation which was a major worry last year, and better corporate earnings have done very little for the stock market as a whole,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market report.
US President Donald J. Trump last week called for a 10% increase in tariffs on $300 billion worth of Chinese imports starting next month, prompting a sell-off in markets across the world and affecting sentiment in the local bourse.
For online brokerage 2TradeAsia.com, investors will heed for China’s response to Mr. Trump, which could better guide markets.
“Investors are also wary as we enter the “ghost month.” According to tradition, you should not make any major investments during this time. All these factors will keep the market from going higher and with a lack of buyers, we may potentially see it go lower,” Mr. Mangun added.
The Chinese ghost month is said to last from Aug. 1 to 29.
Investors will also look at the BSP’s policy meeting this Thursday.
“Having completed the third phase of its reserve requirement cut to 16% from 18%, local monetary authorities may have more leeway in retaining present benchmark rates during their policy meeting,” 2TradeAsia.com said.
The company, however, noted that the BSP may consider another rate cut in the second half, depending on improvements in fiscal spending, especially toward the fourth quarter.
This week will also see the release of several listed firms’ second-quarter earnings reports, including Globe Telecom, Inc.; Ayala Land, Inc.; SM Investments Corp.; Eagle Cement Corp.; Security Bank Corp.; PLDT, Inc.; Petron Corp.; San Miguel Corp.; and Robinsons Land, Corp., among others.
2TradeAsia.com noted that 10 companies which are part of the PSEi with disclosed first-half results yielded a weighted average earnings per share growth of 5.35%, slower than the first quarter’s 9.7%.
AAA Equities’ Mr. Mangun placed the PSEi’s support from 7,920 to 8,000, with resistance from 8,140 to 8,270.
